Abstract: We report the discovery of a small galaxy system in the vicinity of theNeVIII absorber at z=0.20701 toward HE0226-4110. The galaxy system consists oftwo 0.25 L* disk galaxies and a 0.05 L* galaxy all within \Delta v < 300 km-sand rho< 200 h^{-1} physical kpc of the absorber. We consider various scenariosfor the origin of the NeVIII absorption, including photo-ionized gas from aAGN, a starburst driven wind, a hot intragroup medium, hot gas in a galaxyhalo, and a conductive front produced by cool clouds moving at high speedthrough a hot medium. We argue that the conductive front scenario is mostlikely responsible for producing the NeVIII feature, because it is consistentwith the observed galactic environment around the absorber and because itnaturally explains the multi-phase nature of the gas and the kinematicsignatures of the absorption profiles. Although our preferred scenario suggeststhat NeVIII may not be directly probing the warm-hot intergalactic medium, itdoes imply the existence of an extended hot confining medium around a diskgalaxy that may contain a significant reservoir of baryons in the form of hotgas.